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This Can't Be Good!


Canada's housing watchdog is warning a rapid rise in interest rates would be far more devastating for the domestic housing market than oil at US$20 per barrel or an economic depression.   

In its latest round of stress tests, the Canada Mortgage and Housing Corporation said on Thursday a sudden increase in borrowing costs could lead to a 30 per cent drop in home prices, and even the failure of a Canadian financial institution. 

That so-called “reverse stress” scenario was based on a cumulative 240-basis point rise in rates over two quarters in 2016 and 2017.

“An interest rate change of that magnitude within such a short period really means a complete collapse of the bond market,” cautioned Peter Norman, chief economist at Altus Group, in an interview with BNN. 

The housing agency also tested its mortgage loan insurance and securitization businesses against several other scenarios including different changes in the unemployment rate and home prices.
  
In the case of a high-magnitude earthquake, CMHC says home prices could dip 0.6 per cent and unemployment could peak at 8.4 per cent. Meanwhile, an oil price shock could lead to a 7.8 per cent drop in home prices and unemployment at 8.8 per cent. A deflation-induced depression could take home prices down 25 per cent and cause the unemployment rate to hit 13.5 per cent, according to the agency.

CMHC said its mortgage insurance business could incur $1.13 billion in losses in the event of a sudden rise in rates, but that it could withstand the hit. A spokesman for the agency stressed that the scenario is an "extreme case" and would be unprecedented.

Interest rates have started to go up this week as a sell-off in the U.S. bond market has driven bond yields higher, making it more expensive for banks to access capital.

Two of Canada's biggest banks -- TD Bank (TD.TO 0.17%) and Royal Bank (RY.TO 1.59%) -- have hiked their fixed mortgage rates, anywhere from 0.05 percentage points to 0.4 percentage points.

There are concerns that as interest rates rise, some Canadian homeowners could encounter difficulty making their mortgage payments and face the risk of default.

"Households are so leveraged right now and house prices are at such incredibly high levels relative to household incomes," said David Madani, senior Canada economist at Capital Economics.

"Even a moderate doubling in interest rates -- which sounds like a lot but we're talking about maybe 200 basis points (two percentage points) -- could potentially pop the housing bubble."
CMHC said its capital holdings were sufficient to withstand all scenarios it tested. None of the scenarios should be considered a prediction or forecast, the agency added.

"Stress testing involves searching out extreme scenarios that have a very remote chance of happening and planning for them," Romy Bowers, CMHC's chief risk officer, said in a statement.

"Rigorous stress testing is an essential part of our risk management program and allows CMHC to evaluate its capital levels against these scenarios."

Written by The Canadian Press 
Voted One Of Canada’s Best Outdoor Creatives


Astral Media, the outdoor division of Bell Media Canada, is one of Canada’s largest and most respected advertising companies hosting over 30,000 billboards across every region of the country from British Columbia to the Maritimes. It is also Canada’s pre-eminent airport advertising authority. As such, it deals with hundreds of local, regional and national advertising agencies submitting thousands of creative executions each month on behalf of their customers. Bell Media judges all of these billboards each month across the country and selects the very finest for public recognition. 


We are pleased to announce that Consumer Strategies Group’s (CSG) creative has been selected as one of four finalists for August’s Best “Out of Home “national creative from across Canada. The other finalists include Coca Cola, Quebec Lotteries and Samsung S7.

From thousands of billboards submitted nationally, a group of creative and agency professionals voted the “Guided Walking Tour” creative to be among the best for creative concept and design excellence. The billboard, created for Canada Lands Company’s fall campaign, was conceptualized and written by Creative Director, Jim Malner and designed and art directed by Marcus Jeffery. 

We continually strive to better serve our clients strategically, tactically and creatively, and it is great to have CSG team members acknowledged for their creativity and excellent work.
Edmonton CMA Top 10 Builders  - Q1 2016

After the first quarter of 2016, the Qualico Group of builders leads the Edmonton Census Metropolitan Area (CMA) with 308 permits. Q1 April 2015 recorded 5,536 permits in the Edmonton CMA compared to 3,231 in Q1 2016 – a nearly 42% decrease.
Yet, there are the proverbial green shoots beginning to appear and the impact of the devastating Fort McMurray fire could prove to be a net positive to greater Edmonton housing.  What is interesting is the dramatic shifts in market share. 10 years ago the top three builders would have controlled about 30% of the total market whereas today it’s not even 20%. This indicates our market is becoming far more fragmented by new, smaller builders in Edmonton that are taking share from the larger builders. These builders are often new entrants to the market like Morrison Homes and Brookfield Residential from Calgary and Mattamy Homes from Toronto.TI)
TOP B UILDERS BY TOTAL PERMITS PULLED (SINGLE & MULTI)
TOP BUILDERS BY TOTAL PERMITS PULLED (SINGLE & MULTI)

Builder
Total Permits (Single & Multi)
Market Share YTD
1
Qualico Group (Augusta, Sterling, Pacesetter, Connect, Streetside)
308
9.5%
2
Brookfield Residential
246
7.6%
3
Daytona Homes Master Builder
109
3.4%
4
Homes by Avi (Edmonton) Inc.
104
3.2%
5
Landmark Group of Companies
84
2.6%
6
Jayman BUILT
79
2.4%
7
Coventry Homes Inc.
76
2.4%
8
Regency Developments
57
1.8%
9
Dolce Vita Homes LP
54
1.7%
10
Lincolnberg Homes
46
1.4%

TOP BUILDERS BY SINGLE PERMITS PULLED

Builder
Single Permits Pulled
Market Share YTD
1
Qualico Group (Augusta, Sterling, Pacesetter, Connect)
132
4.1%
2
Jayman BUILT
69
2.1%
3
Coventry Homes Inc.
66
2.0%
4
Landmark Group of Companies
54
1.7%
5
Brookfield Residential
53
1.6%
6
Homes by Avi (Edmonton) Inc.
49
1.5%
7
Daytona Homes Master Builder
38
1.2%
8
Dolce Vita Homes LP
38
1.2%
9
Morrison Homes
32
1.0%
10
Parkwood Master Builder Inc.
23
0.7%

TOP BUILDERS BY MULTI PERMITS PULLED

Builder
Multi Permits Pulled
Market Share YTD
1
Brookfield Residential
193
6.0%
2
Qualico Group (Sterling, Pacesetter, Connect, Streetside)
176
5.4%
3
Daytona Homes Master Builder
71
2.2%
4
Homes by Avi (Edmonton) Inc.
55
1.7%
5
Regency Developments
36
1.1%
6
Landmark Group of Companies
30
0.9%
7
Lincolnberg Homes
24
0.7%
8
Rohit Group of Companies
24
0.7%
9
Carrington Group ( Carrington Communities)
22
0.7%
10
Cameron Homes Inc.
20
0.6%
Edmonton Neighbourhoods in Revolt Over Residential Lot-Splitting


It’s not just lawn signs now. Legal measures to prevent any increased density are starting to take hold in half a dozen mature neighbourhoods. Most residents of Westbrook have already signed a restrictive covenant to prevent lot-splitting or duplexes in perpetuity and several other neighbourhoods are organizing. “There’s a tremendous number of people upset with this,” said Victoria Archer, a lawyer and resident of Capilano, which scheduled a set of community meetings on restrictive covenants starting next week. “People here are furious with city council, absolutely furious.”

In April 2015, council amended the zoning bylaw to allow anyone to subdivide a residential property at least 50 feet (15.24 metres) wide. They saw it as a fair way to permit a gradual increase in density across the city. But although the deliberations were covered in the media and council held a public hearing, many people didn’t find out until a subdivision happened in their neighbourhood.

Westbrook was the first to rally after a $950,000, 96-foot (29.2 metre) property on Fairway Drive was subdivided. But protests signs are now spreading. Lansdowne, Aspen Gardens, Rio Terrace, Capilano – all have vocal residents realizing the only way to prevent neighbours from splitting their lot and building two homes in place of one is by signing a legally-binding agreement among neighbours. They expect to have 80 per cent of Westbrook homeowners signed on by June. Once that’s done, no one who buys one of those properties can ever subdivide it or build a duplex again. If they try, other signatories can take them to court. The only way to take the caveat off again is by getting every single signatory to agree.

Westbrook resident Darren Jacknisky said the issue is preserving the look and feel of the neighbourhood he bought into. “When you buy into a certain area, you anticipate that area being a certain way. Everyone has their ideal,” Jacknisky said. “I bought here because I wanted to have a good backyard and large side setbacks, so I can have privacy.”

Subdivision isn’t creating more affordable housing, added Archer. What Capilano and its sister neighbourhoods of Greater Hardisty need is more seniors housing, which would free up their former homes for new families, she said.A renovated home is much more affordable than a new home, even if it’s built on half a lot, she said, pointing to new skinny homes going for $500,000 and up.

Councillor Michael Oshry said he sympathizes with residents who say lot-splitting will change the character of a neighbourhood but said they need to recognize this is a gradual process. One or two subdivisions are expected each year in neighbourhoods of 500 to 1,000 houses. “It’s going to be a very, very slow process,” he said. As for residents warning this issue will blow up come next election, Oshry didn’t seem worried. “It’s some people in some neighbourhoods. It will be an issue but is will be one of many issues.”

Neighbourhoods upset over lot splitting:

Westbrook – Organizers in Westbrook expect to have 80 per cent of the homes legally committed to never subdivide or build more than a single-family home on their lot by June, said Darren Jacknisky.
Aspen Gardens – Volunteers are going door-to-door to get commitments of interest from the 510 single-family homes. Organizer Al McCully said they’ve reached a third of the doors so far and are finding strong support.
Lansdowne  One subdivision in the Lansdowne neighbourhood prompted a flurry of protest signs but most residents are still undecided about a restrictive covenant, said organizer Jason Chin.
Greater Hardisty – The neighbourhoods of Capilano, Fulton Place and Gold Bar are tackling this together with meetings scheduled for May 31 and June 6. Some pockets already have overwhelming support for a restrictive covenant, said organizer Victoria Archer. It’s likely blocks of houses will sign on rather than entire neighbourhoods.
Rio Terrace – Several residents organized an information meeting on restrictive covenants last weekend with a lawyer Chris Bowie and several dozen homeowners signed up. Now the community is organizing street captains to go door to door to built support in the rest of the neighbourhood.
Valleyview – Organizers in this subsection of Parkview focused their efforts on the few blocks around the first lot splitting to hit their neighbourhood. “People really don’t get it until it’s across the street from you,” said organizer Lisa Miller. They’ve got many protest signs but are still trying to judge if there will be enough support for a restrictive covenant.
As reported by ELISE STOLTE (Edmonton Journal)